Subtitle A-Taxes Subject to the Jurisdiction of the Board of Tax Appeals TABLE OF CONTENTS CHAPTER 1-INCOME TAX SUBCHAPTER A-INTRODUCTORY PROVISIONS Sec. 1. Application of chapter. Sec. 2. Cross references. Sec. 3. Classification of provisions. Sec. 4. Special classes of taxpayers. SUBCHAPTER B- -GENERAL PROVISIONS PART I-RATES OF TAX Sec. 11. Normal tax on individuals. Sec. 12. Surtax on individuals. Sec. 13. Tax on corporations in general. Sec. 14. Tax on special classes of corporations. Sec. 15. Corporate taxes effective for two taxable years. Sec. 21. Net income. PART II-COMPUTATION OF NET INCOME Sec. 22. Gross income. Sec. 23. Deductions from gross income. Sec. 24. Items not deductible. Sec. 25. Credits of individual against net income. Sec. 26. Credits of corporations. Sec. 27. Corporation dividends paid credit. Sec. 28. Consent dividends credit. PART III-CREDITS AGAINST TAX Sec. 31. Taxes of foreign countries and possessions of United States. Sec. 33. Credit for overpayments. PART IV-ACCOUNTING PERIODS AND METHODS OF ACCOUNTING Sec. 41. General rule. Sec. 42. Period in which items of gross income included. Sec. 45. Allocation of income and deductions. Sec. 46. Change of accounting period. Sec. 47. Returns for a period of less than twelve months. PART V-RETURNS AND PAYMENT OF TAX Sec. 51. Individual returns. Sec. 52. Corporation returns. Sec. 53. Time and place for filing returns. Sec. 54. Records and special returns. Sec. 55. Publicity of returns. Sec. 56. Payment of tax. Sec. 57. Examination of return and determination of tax. Sec. 58. Additions to tax and penalties. Sec. 59. Administrative proceedings. Sec. 60. Cross references. PART VI-MISCELLANEOUS PROVISIONS Sec. 61. Laws made applicable. Sec. 62. Rules and regulations. Sec. 63. Publication of statistics. Sec. 64. Definitions. SUBCHAPTER CSUPPLEMENTAL PROVISIONS SUPPLEMENT A-RATES OF TAX Sec. 101. Exemptions from tax on corporations. Sec. 102. Surtax on corporations improperly accumulating surplus. Sec. 103. Rates of tax on citizens and corporations of certain foreign countries. Sec. 104. Banks and trust companies. Sec. 105. Sale of oil or gas properties. Sec. 106. Claims against United States involving acquisition of property. SUPPLEMENT B-COMPUTATION OF NET INCOME Sec. 111. Determination of amount of, and recognition of, gain or loss. Sec. 112. Recognition of gain or loss. Sec. 113. Adjusted basis for determining gain or loss. Sec. 114. Basis for depreciation and depletion. Sec. 115. Distributions by corporations. Sec. 116. Exclusions from gross income. Sec. 117. Capital gains and losses. Sec. 118. Loss from wash sales of stock or securities. Sec. 119. Income from sources within United States. Sec. 120. Unlimited deduction for charitable and other contributions. Sec. 121. Deduction of dividends paid on certain preferred stock of certain corporations. SUPPLEMENT C-CREDITS AGAINST TAX Sec. 131. Taxes of foreign countries and possessions of United States. SUPPLEMENT D-RETURNS AND PAYMENT OF TAX Sec. 141. Consolidated returns of railroad corporations. Sec. 142. Fiduciary returns. Sec. 143. Withholding of tax at source. Sec. 144. Payment of corporation income tax at source. Sec. 145. Penalties. Sec. 146. Closing by Commissioner of taxable year. Sec. 148. Information by corporations. Sec. 149. Returns of brokers. Sec. 150. Collection of foreign items. Sec. 151. Foreign personal holding companies. SUPPLEMENT E-ESTATES AND TRUSTS Sec. 161. Imposition of tax. Sec. 162. Net income. Sec. 163. Credits against net income. Sec. 164. Different taxable years. Sec. 165. Employees' trusts. Sec. 166. Revocable trusts. Sec. 167. Income for benefit of grantor. Sec. 168. Taxes of foreign countries and possessions of United States. SUPPLEMENT F-PARTNERSHIPS Sec. 181. Partnership not taxable. Sec. 182. Tax of partners. Sec. 183. Computation of partnership income. Sec. 184. Credits against net income. Sec. 185. Earned income. Sec. 186. Taxes of foreign countries and possessions of United States. Sec. 188. Different taxable years of partner and partnership. SUPPLEMENT G-INSURANCE COMPANIES Sec. 201. Tax on life insurance companies. Sec. 202. Gross income of life insurance companies. Sec. 204. Insurance companies other than life or mutual. Sec. 205. Taxes of foreign countries and possessions of United States. Sec. 206. Computation of gross income. Sec. 207. Mutual insurance companies other than life. SUPPLEMENT H-NONRESIDENT ALIEN INDIVIDUALS Sec. 211. Tax on nonresident alien individuals. Sec. 212. Gross income. Sec. 213. Deductions. Sec. 214. Credits against net income. Sec. 215. Allowance of deductions and credits. Sec. 216. Credits against tax. Sec. 217. Returns. Sec. 218. Payment of tax. Sec. 219. Partnerships. SUPPLEMENT I-FOREIGN CORPORATIONS Sec. 231. Tax on foreign corporations. Sec. 232. Deductions. Sec. 233. Allowance of deductions and credits. Sec. 234. Credits against tax. Sec. 235. Returns. Sec. 236. Payment of tax. Sec. 237. Foreign insurance companies. Sec. 238. Affiliation. SUPPLEMENT J-POSSESSIONS OF THE UNITED STATES Sec. 251. Income from sources within possessions of United States. SUPPLEMENT K-CHINA TRADE ACT CORPORATIONS Sec. 261. Taxation in general. Sec. 262. Credit against net income. Sec. 263. Credits against the tax. Sec. 264. Affiliation. Sec. 265. Income of shareholders. SUPPLEMENT L-ASSESSMENT AND COLLECTION OF DEFICIENCIES Sec. 271. Definition of deficiency. Sec. 272. Procedure in general. Sec. 273. Jeopardy assessments. Sec. 274. Bankruptcy and receiverships. Sec. 275. Period of limitation upon assessment and collection. Sec. 276. Same-Exceptions. Sec. 277. Suspension of running of statute. SUPPLEMENT M-INTEREST AND ADDITIONS TO THE TAX Sec. 291. Failure to file return. Sec. 292. Interest on deficiencies. Sec. 293. Additions to the tax in case of deficiency. Sec. 294. Additions to the tax in case of nonpayment. Sec. 295. Time extended for payment of tax shown on return. Sec. 296. Time extended for payment of deficiency. Sec. 297. Interest in case of jeopardy assessments. Sec. 298. Bankruptcy and receiverships. Sec. 299. Removal of property or departure from United States. SUPPLEMENT P-FOREIGN PERSONAL HOLDING COMPANIES Sec. 331. Definition of foreign personal holding company. Sec. 332. Foreign personal holding company income. Sec. 333. Stock ownership. Sec. 334. Gross income of foreign personal holding companies. Sec. 335. Undistributed supplement P net income. Sec. 336. Supplement P net income. Sec. 337. Corporation income taxed to United States shareholders. Sec. 339. Information returns by shareholders. Sec. 340. Penalties. SUPPLEMENT Q-MUTUAL INVESTMENT COMPANIES Sec. 361. Definition. Sec. 362. Tax on mutual investment companies. SUPPLEMENT R-EXCHANGES AND DISTRIBUTIONS IN OBEDIENCE TO ORDERS OF THE SECURITIES AND EXCHANGE COMMISSION Sec. 371. Nonrecognition of gain or loss. Sec. 372. Basis for determining gain or loss. Sec. 373. Definitions. CHAPTER 1-INCOME TAX SUBCHAPTER A-INTRODUCTORY PROVISIONS SEC. 1. APPLICATION OF CHAPTER. The provisions of this chapter shall apply only to taxable years beginning after December 31, 1938. Income, war-profits, and excessprofits taxes for taxable years beginning prior to January 1, 1939, shall not be affected by the provisions of this chapter, but shall remain subject to the applicable provisions of the Revenue Act of 1938 and prior revenue acts, except as such provisions are modified by legislation enacted subsequent to the Revenue Act of 1938. SEC. 2. CROSS REFERENCES. The cross references in this chapter to other portions of the chapter, where the word "see" is used, are made only for convenience, and shall be given no legal effect. SEC. 3. CLASSIFICATION OF PROVISIONS. The provisions of this chapter are herein classified and designated as Subchapter A-Introductory provisions, Subchapter B-General provisions, divided into Parts and sections, Subchapter C-Supplemental provisions, divided into Supplements and sections. SEC. 4. SPECIAL CLASSES OF TAXPAYERS. The application of the General Provisions and of Supplements A to D, inclusive, to each of the following special classes of taxpayers, shall be subject to the exceptions and additional provisions found in the Supplement applicable to such class, as follows: (a) Estates and trusts and the beneficiaries thereof,-Supple ment E. (b) Members of partnerships,-Supplement F. (c) Insurance companies, Supplement G. d) Nonresident alien individuals, Supplement H. (e) Foreign corporations,-Supplement I. (f) Individual citizens of any possession of the United States who are not otherwise citizens of the United States and who are not residents of the United States,-Supplement J. (g) Individual citizens of the United States or domestic corporations, satisfying the conditions of section 251 by reason of deriving a large portion of their gross income from sources within a possession of the United States,-Supplement J. (h) China Trade Act corporations,-Supplement K. (i) Foreign personal holding companies and their shareholders,Supplement P. (j) Mutual investment companies-Supplement. SUBCHAPTER B-GENERAL PROVISIONS Part I-Rates of Tax SEC. 11. NORMAL TAX ON INDIVIDUALS. There shall be levied, collected, and paid for each taxable year upon the net income of every individual a normal tax of 4 per centum of the amount of the net income in excess of the credits against net income provided in section 25. SEC. 12. SURTAX ON INDIVIDUALS. (a) DEFINITION OF "SURTAX NET INCOME".-As used in this section the term "surtax net income" means the amount of the net income in excess of the credits against net income provided in section 25 (b). (b) RATES OF SURTAX.-There shall be levied, collected, and paid for each taxable year upon the surtax net income of every individual a surtax as follows: Upon a surtax net income of $4,000 there shall be no surtax; upon surtax net incomes in excess of $4,000 and not in excess of $6,000, 4 per centum of such excess. $80 upon surtax net incomes of $6,000; and upon surtax net incomes in excess of $6,000 and not in excess of $8,000, 5 per centum in addition of such excess. $180 upon surtax net incomes of $8,000; and upon surtax net incomes in excess of $8,000 and not in excess of $10,000, 6 per centum in addition of such excess. $300 upon surtax net incomes of $10,000; and upon surtax net incomes in excess of $10,000 and not in excess of $12,000, 7 per centum in addition of such excess. $440 upon surtax net incomes of $12,000; and upon surtax net incomes in excess of $12,000 and not in excess of $14,000, 8 per centum in addition of such excess. $600 upon surtax net incomes of $14,000; and upon surtax net incomes in excess of $14,000 and not in excess of $16,000, 9 per centum in addition of such excess. $780 upon surtax net incomes of $16,000; and upon surtax net incomes in excess of $16,000 and not in excess of $18,000, 11 per centum in addition of such excess. $1,000 upon surtax net incomes of $18,000; and upon surtax net incomes in excess of $18,000 and not in excess of $20,000, 13 per centum in addition of such excess. $1,260 upon surtax net incomes of $20,000; and upon surtax net incomes in excess of $20,000 and not in excess of $22,000, 15 per centum in addition of such excess. $1,560 upon surtax net incomes of $22,000; and upon surtax net incomes in excess of $22,000 and not in excess of $26,000, 17 per centum in addition of such excess. $2,240 upon surtax net incomes of $26,000; and upon surtax net incomes in excess of $26,000 and not in excess of $32,000, 19 per centum in addition of such excess. $3,380 upon surtax net incomes of $32,000; and upon surtax net incomes in excess of $32,000 and not in excess of $38,000, 21 per centum in addition of such excess. $4,640 upon surtax net incomes of $38,000; and upon surtax net incomes in excess of $38,000 and not in excess of $44,000, 24 per centum in addition of such excess. $6,080 upon surtax net incomes of $44,000; and upon surtax net incomes in excess of $44,000 and not in excess of $50,000, 27 per centum in addition of such excess. |